This is one scenario that could unfold following a federal judge's ruling Wednesday, which upheld a Vermont law patterned after California's mandate that the carbon-dioxide emissions of cars sold in the state must be slashed 30 percent by 2016.

The judge's finding – that federal fuel-economy laws are not in conflict with state emissions laws – is particularly significant, coming on the heels of a US Supreme Court decision in April. That ruling found that the Environmental Protection Agency has the authority to regulate greenhouse-gas emissions, legal experts say.

• Prompting the US EPA to grant California a waiver from the Clean Air Act allowing it, along with Vermont and the 10 other states with identical laws, to begin enforcing greenhouse-gas requirements for cars sold within their borders.

• Causing six additional states – Arizona, Florida, New Mexico, Utah, Illinois, and Minnesota – to proceed with their own similar emissions requirements. Altogether, the 18 states that have such laws – or are leaning toward them – make up about half the US auto market.

• Spurring Congress to reconsider the new fuel-efficiency standards it is currently weighing, which are not as demanding as Vermont's, and mandate a tougher federal requirement that would also reduce greenhouse-gas emissions.

• Causing federal judges in two similar cases brought by the auto industry – one in California, the other in Rhode Island – to dismiss those cases if they determine the industry has had its day in court and further proceedings would be redundant, according to environmental lawyers.

Still, this would be "the most significant step so far" on vehicle emissions and pave the way for broader action, says Michelle Robinson, director of the clean vehicle program at the Union of Concerned Scientists, a Washington environmental group not party to the lawsuit.

Environmental groups, who joined Vermont as defendants in the current case, have been exultant. "This extremely important ruling makes clear that the US EPA and states acting under the Clean Air Act do have the power to set more stringent emissions limits on cars and can also regulate greenhouse gases," says attorney Matt Pawa, who represented the Natural Resources Defense Council, the Sierra Club, and Environmental Defense.

Following the three-week trial, it was quite clear that US district judge William Sessions found less than convincing the arguments of auto-industry experts, who testified that the industry lacks the technology to make such vehicles and cannot afford to do so. The companies, he wrote, "have not carried their burden to show that compliance with the regulation is not feasible; nor have they demonstrated that it will limit consumer choice, create economic hardship for the automobile industry, cause significant job loss or undermine safety."

Auto-industry officials sounded a defiant note and promised to use what influence they could to try to block the EPA waiver to California, as well as potentially launch a court appeal.

Concerning EPA's key decision on whether to grant the waiver requested by California, Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, said in a statement that "the Alliance remains committed to working with policy makers to make certain that the EPA's judgment is based on credible, sound scientific data as to what policies truly impact California, its citizens and global climate concerns."

Yet some analysts see a familiar pattern being played out in which state mandates could be followed by federal requirements – which happened with the adoption of seat belts, air bags, and higher mileage standards. "We've got a similar dynamic here to what was happening in the 1990s with states leading with strict standards on tailpipe emissions of nitrous oxide and other pollutants – and the EPA and federal government finally following," Ms. Robinson says.

The practical impact of the ruling could be more-efficient vehicles as soon as the 2009 model year, Mr. Pawa predicts – based on the idea that the industry could not afford to wait and see what Congress does. But veteran auto-industry analysts aren't so sure. "You can wish for 100 miles per gallon or 200 m.p.g., but that doesn't mean you can make it happen," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

Others, however, say the ruling makes such arguments moot. "The court is looking carefully at the industry's argument that this will bankrupt us and drive us to ruin," says Steve Hinchman, an attorney for the Conservation Law Foundation. "The judge found the so-called obstacles to be overstated and that the industry has the financial resources. It's ironic because this is a step that's going to help the US auto industry. They should fire their lawyers and promote their engineers."

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